Invariance Principle and “G-Neutral” Types of Technical Change

Abstract

In Sato [1981], it was shown that the Lie type of technical progress under its own holothetic production function can always be expressed as a “Hicks” neutral type of product-augmenting technical progress (Corollary 1 to Theorem 4). On the other hand, it was also shown that any given production function has at least one type of technical change that leaves the isoquant map unchanged, the Hicks neutral type being of course, one of them. This result may justify the frequent uses of the Hicksian product-augmenting technical progress in many theoretical and empirical analyses of cost and production functions (see, e.g., Arrow, et. al. [1961], Kendrick and Sato [1963], Solow [1957]).KeywordsProduction FunctionWage RateTechnical ChangeTechnical ProgressInvariance PrincipleThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.